In today’s post we’re going to look at an issue which has received quite a lot of “air time” in the press recently – protected disclosures, confidentiality (or – as they’ve been termed – “gagging clauses”) and compromise agreements. We’ll have a brief look at the various issues involved, in particular by examining:

  1. What is a compromise agreement?
  2. What is a protected disclosure?
  3. Why all the fuss recently about protected disclosures and compromise agreements?
  4. Doesn’t s.43j of the Employment Rights Act 1996 cover this?

What is a compromise agreement?

First off, a definition of a “compromise agreement”. A compromise agreement is a contract which is regulated by statute. This contract allows for the settling of Employment Tribunal proceedings and/or waiving the employee’s rights to make a claim to the Employment Tribunal in return for the receipt of some benefit to the employee. This benefit can be financial such as a sum of money) and/or non-financial (such as the promise to give an agreed reference to a future employer). There are specific rules regarding what constitutes a valid compromise agreement but we won’t cover these here.

What is a protected disclosure?

Under the ERA 1996 an employee has the right not to be dismissed or subjected to a detriment because they’ve made a protected disclosure. A “protected disclosure” is defined by s.43 of the Act – it is:

  • The disclosure of information which (in the reasonable belief of the worker) shows that one of the following has been, is being or is likely to be committed: a criminal offence, a failure to comply with a legal obligation, a miscarriage of justice, the endangering of the health or safety of any individual or the damaging of the environment;
  • Disclosed to the employer or some other responsible person, a lawyer or a Minister of the Crown; and
  • Made in good faith, with reasonable belief that the information is substantially true and is not for reasons connected to personal gain

Why all the fuss recently about protected disclosures and compromise agreements?

The recent media coverage of compromise agreements and “gagging orders” (more commonly referred to as confidentiality clauses) was spurred by Gary Walker (A former NHS Trust chief executive) breaking cover last week regarding a compromise agreement he had signed in April 2011 which stopped him from disclosing information relating to his employment with his employer’s consent. This, he stated, meant that he wasn’t allowed to disclose information to the media regarding potential malpractice at the NHS Trust that he worked for. Stephen Dorrell then weighed into the dispute, writing to Jeremy Hunt (current Health Secretary) that confidentiality clauses shouldn’t stop employees from highlighting patient safety concerns. Mr Hunt, in return, responded by confirming the same.

Doesn’t s.43j of the Employment Rights Act 1996 cover this?

In light of the above, it would be expected that there had been a legislative oversight regarding the potential for employers to stop employees making protected disclosures after a compromise agreement has been signed. But has there? S.43j of the Employment Rights Act 1996 would suggest not. Under s.43j:

(1) Any provision in an agreement to which this section applies is void in so far as it purports to preclude the worker from making a protected disclosure.

(2)This section applies to any agreement between a worker and his employer (whether a worker’s contract or not), including an agreement to refrain from instituting or continuing any proceedings under this Act or any proceedings for breach of contract.

There does not therefore seem to be any bar to a “worker” making a protected disclosure regarding their termination – any provision attempting to stop the worker doing so is void and unenforceable. The only unfortunate part of this is that “worker” isn’t defined under the Act – there’s some ambiguity as to whether an ex-employee can still be a “worker”. This would therefore mean that if an employee had signed a compromise agreement (that hadn’t resulted in the termination of their employment) and subsequently made a protected disclosure then their position would be protected. Again, the only sticking point is as to whether a former employee enjoys the same protection. Storm in a teacup, anyone?

Redmans Solicitors offer expert legal advice from employment law solicitors and settlement agreement solicitors.

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Redmans Employment Team deal with employment matters for both employers and employees, including drafting employment contracts and policies, advising employers and employees on compromise agreements, handling day-to-day HR issues, advising on restructures, and handling Employment Tribunal cases for both employers and employees

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